In part I of our video interview series with Les Moeller we learned about the phenomenon of trading up, trading down and trading across. This consumer behavior has been sparked by the new economy that we are operating in. The next logical question is whether or not this leads to an opportunity to capture new customers?

Watch the video below of Leslie Moeller, VP Booz and Co. to hear his thoughts on using the current consumer behavior to capture new customers. Les will also address the ever important challenge of pricing products in a down economy - Is lowering your price the right strategy? And the idea of positioning yourself for success when the economy rebounds.

When I was a sophomore in high school, I fell in love for the first time.

Although the object of my affection, a pair of jeans, was priced far beyond my limited budget and despite the fact that even after trying on several different sizes they still somehow didn’t fit quite right, I saved three months of babysitting money to buy those jeans; I’d recently seen the same pair worn by the most popular girl in my class and believed that if I had them, I too, might magically become cool.

Understanding the Opportunity:

Of course I had placed far too much stake in the ownership of those jeans -- but for marketers trying to reach a teenage audience, it's important to note that my belief, that ownership of a specific item was directly connected to my ascent in the adolescent social hierarchy, is in fact the rule, rather than the exception, for this highly desirable consumer demographic.

My story took place fifteen years ago but today, while teens are equally prone to imitation, this highly connected group has many channels beyond their high school cafeterias for keeping tabs on the latest trends and their peers’ consumption habits. Given that the US teen market is expected to swell to 208.7 billion [1] dollars by 2011, marketers have every reason to seize upon the opportunity to extend an engaging offer just when their target teen buyer is looking to make a purchase.

In addition, with 74% of Internet users aged 12-17 engaged in social networking and nearly half of them logging in twice daily[2], savvy marketing professionals will look to social networks to attract teenage consumers. After all, those social network status updates and social network profiles teens love to look at are full of information on their peers’ likes, dislikes and purchase intentions, making social networks an excellent venue for discovering new products and services as “friends” link to things that interest them, and spread the word virally.

And, with social networking becoming increasingly mainstream, teens will become that much more likely to turn to their contacts and networks, choosing peer opinions versus expert opinions.

How Google Can Help:

The Content Network: You can easily reach social teens by using Google’s Ad Planner to target social sites on Google’s Content Network by category or user demographic . Better still, instead of negotiating multiple placements, with our Content Network you can target 48 of the top 100 social sites including MySpace and 8 of the most popular applications on Facebook.

Because we value your investment and want to help you maximize its effectiveness, we’ve also developed some great tools to help you do just that:

Demographic Bidding . Control how frequently certain age and gender groups see your ad by adjusting how much you're willing to pay for them.

I recently read an excellent article on the value ofsocial search. The premise of this article was that in addition to using content to reach social teens, if you have social features on your own website or are aware of third party sites where your brand is reviewed, you then have the opportunity to reach teen social media users across multiple touch-points and engage them with your brand by directing users to your social media content, using keyword-targeted search campaigns.

Make Your Site Social:

If you haven't seen our free new tool, Google Friend Connect, I strongly recommend checking it out. Consider upping your audience’s level of engagement with your website by using engaging social features that are easy to add to your site - no programming skills needed.

Sticky Messaging:

Focus on the Offline World: Teens are very aware of the world around them and naturally turn to online to seek information about the offline world. Both multi-channel and pureplay retailers can capitalize on this trend by keeping ad text themed to upcoming events.

Lighten up:Teenagers also relate to humor, silliness, and irreverence, and since teens are frequent media multi-tuskers they are often bombarded by media messages. To cut through the noise and reach this group, you may want to appeal to their silly side to ensure you stand out from the crowd.

Find your Niche: Known for constantly changing their tastes and seeking out novel products, teens are fickle. Businesses can use this knowledge to their advantage in discovering large, lucrative niches by orienting themselves toward a particular teen lifestyle – gothic, hipster, urban, and so forth. With niche teen retailers like Aeropostale Inc. and Hot Topic beating analysts’ estimates, we are seeing that differentiated teen retailers are continuing to achieve results even in the midst of a recession. If you are looking to benefit from this trend in your own business, you may want to highlight your brand’s point of differentiation and showcase your newest products in your messaging.

Looking for a hot new trend? Believe it or not, it's modest dress. Whether it’s more of a fiscal or moral shift, understated girls’ clothing may indeed be making a comeback. When consumer insights firm BIGresearch polled 5,000 consumers last fall, 64 percent agreed or strongly agreed with the statement, ”Fashions for young people have gotten too provocative.” As teens shift toward wanting to be more comfortable and more covered, brands should be rising to meet these needs.

Keep it Real: Today’s teenagers share an inveterate cynicism about corporate messages - to reach them, keep your messaging honest and sincere. If you followed the recent news aboutBike Hero being fake, it’s a great reminder that teens have extremely fine-tuned internal lie detectors. For brands trying to reach teens, the key factor is, and has always been,sincerity.

Do Good: A national telephone survey released this February by the Federal Way-based charity World Vision found that more teens volunteer to support a charitable cause — 56 percent — than have a part-time job, at 39 percent.Today’s socially conscious teens are well aware of global warming, the importance of recycling, carbon offsets and our global footprint. They respond well to companies that share in their quest to leave the world a better place - so craft your messaging accordingly.

ASAP, EOD, POV, FYI, ETA, COB, SOV, ROI – when did a few letters begin to mean so much? Out of all the everyday acronyms thrown around, ROI is by far the most important metric for our clients in today’s market. The key question from every one of our clients is “What is my return on investment?” For years we, as a search company, have been able to point to high online sales ROI for our clients, but an element in the ROI equation has been MIA – how can we prove that online advertising (both search and display) actually affects in-store sales? If you take into account consumers researching prices and specific products online and going in-store to purchase, the overall ROI for search marketing drastically increases. But how can we prove this online to offline phenomenon is occurring?

For years small research tests and anecdotal stories pointed to online assisting offline, but more in terms of brand awareness and consideration. Our team wanted to prove online advertising contributed to offline sales. Not top of the funnel activities like others have proved, but actual hard number sales.

One of our clients appeared to be the perfect fit for this type of test. With more than 1,000 retail locations nationwide and no e-commerce shopping available (except for gift card purchases), we could create a test to measure the impact of online advertising on in-store sales. In order for this test to work, we would need the client to share sales, unit and transaction data, as well as have our research team identify suitable test and control DMAs for search and content advertising. We pitched the idea to the client and their online media agencies as a test to compare the sales lift produced by online advertising in comparison to other media vehicles in the marketing mix as a more cost-efficient means of assisting all stores, including struggling locations. The existing media plan for the client relied heavily on television commercials, newspaper inserts, shared mail and direct mail, with a small percentage of the existing budget going to online and the largest percentage going to direct mail. If we could prove a strong ROI for online, while showcasing additional benefits of online compared to traditional advertising (very quick turnaround times, minimal production costs, and being present when consumers were actively engaging for relevant content) we hoped we could make a case for a shift in online's importance in the media mix.

The client and agency both agreed that the test appeared compelling and interesting. With their interest piqued, our research team moved forward, creating test DMAs to heavy up search and content advertising in specific product categories, especially furniture. Furniture is typically a high consideration purchase, with a long purchase cycle and everyone wanted to better understand how online advertising impacts the buying cycle. Control markets were also established where the selected product categories would not be promoted and all other advertising remained consistent across all DMAs to ensure the marketing mix was not interrupted. The next important step was that the client agreed to share its sales, unit, and transaction data for specific time periods (one month before the testing period, the three week test period, and two weeks after the test, for both 2007 and 2008) for the purposes of test design and analysis. Ultimately, 59 DMAs were selected as test markets and 93 DMAs were selected as control markets for the test, focusing on specific furniture products and the client’s brand terms.

Throughout the test (conducted in late September/early October), our team had its concerns – the economy was crumbling before our eyes, retailers were declaring bankruptcy, and consumer confidence was near an all-time low – was this the right time to go about this huge test with our client? We anxiously awaited the results with antacids in hand, and were pleasantly surprised by the final results.

Despite the poor state of the economy, low consumer confidence and decreased sales across the board for national retailers, our client saw a 2% overall sales lift in the test DMAs over the control markets, which is on par with results from pricey newspaper inserts and other offline media. Specifically, the furniture category saw a sales lift of 1.4%, but that number could have been higher if we had continued to analyze sales data for a longer period of time (the sales cycle for furniture extends longer than the five weeks of data we were able to collect from the client). Additionally, great lifts were seen in categories such as dining and decorative accessories (2.9% and 2.2% sales lift respectively) that have shorter sales cycles and could have resulted from furniture searches driving foot traffic in-store. Struggling stores saw an even more impressive lift of up to 5.3% in revenue – well above what we thought possible in certain markets. And back to the all-important three letters of R O I – our test delivered a 300% ROI for our client, with $3 in sales for every $1 spent online.

Excited, ecstatic, thrilled, ready to get to work on building out more keywords and campaigns – that is where our team is today, and proud that we could partner to help our client to be more efficient with their marketing spend to drive more sales for their business.

We know it’s important to you to drive results through your marketing efforts and target those consumers most likely to convert on your site and hopefully to become loyal brand enthusiasts. You asked for tighter targeting and increased efficiency in managing your campaigns and in the spirit of providing the best possible experience for you and for our users, we’ve worked with our product and engineering teams to do just that.

Why Use Interest Based Advertising?

Yesterday, we announced our plans for an "interest-based" advertising beta test on YouTube and our Content Network which will allow you to use our contextual advertising platform to tailor targeting and messaging to those users who are most likely to be interested in the product or service you have to offer.

Interest-based ads will associate categories of interest — say beauty, shopping, and gardening— with a Google user’s online behavior, based on the types of sites that the user visits and the pages the user views. Additionally, by visiting the newAds Preferences Manager, users can also see what interest categories we think they fall into and then add and remove categories according to their preferences. Based on these preferences, we may then use those interest categories to show those users more relevant text and display ads.

How Can I Sign Up?

Over the next few months we'll start offering interest-based advertising to a limited number of advertisers as part of a beta, and expand the offering later in 2009. If you would like to participate in the beta, please fill outthis form.

Where can I learn more?

To learn more about the details of interest-based advertising, please visit thisAdWords FAQ.

We had the opportunity to sit down with Les Moeller, VP Booz & Co. The topic was of course the economy and more pointedly how consumers are changing their behaviors to adjust for the new reality that we are all living in.

Les Moeller leads Booz & Co.'s North American work in the consumer, media, and retail industries and therefore is especially qualified to comment on shifting consumer behavior and the ways in which retailers are responding.

Please join us by clicking below for Part I of III of our video interview series with Les.

Despite the current economic conditions facing the world, one could argue that we should always be striving to “Do More With Less”. So what does this mean? As a Retail analyst at Google I decided to figure it out for myself. On a daily basis all decisions that I make need to be timely, data-driven and scalable. So, in the process of eating my own dog food I thought I would review a portion of the Google “Do More With Less” web site to see if the juice was “worth the squeeze”.

The tool I will be reviewing today is called “Insights for Search” . This product allows marketers to examine what consumers are searching for over time, across categories, and within certain geographies. Let's say you are a department store or apparel retailer trying to better understand when people start searching for terms related to bathing suits. According to the graph below, it appears that search traffic patterns are consistent over time. Looking at past years helps you anticipate increased demand.Searches for swimwear start in mid-December over the holiday period (perhaps for warm winter get-aways or gifts). Interest in swimwear continues to climb in the beginning of the year and peaks in mid-winter, when people are taking warm weather vacations.

Marketers can time when to increase budget as interest level increases so that your advertisement is there when people are searching for you. It might not be obvious that swimwear searches are increasing right now, in February (although given the cold weather, I can see why people are dreaming about the beach). If we type bathing suits into Google, we see that Victoria’s Secret, JC Penney, and Newport News are doing a good job of attracting the consumer interest.

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If we look at the bottom of the page, we see the fastest rising search terms for this category.One search term, “monokini” rose 700% over the past two years.

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Refining the parameters of your report may help provide insights to Retailers on how to take advantage of trends and make informed, merchandising decisions. In addition, marketers can use this information to better time promotions and advertising to meet consumer demand. So the real question for retailers is… Are “monokinis” back after a ten-year hiatus?

Interesting trends aside, here is what I found while playing around with Google Insights as well as the other free products on Google’s “Do More With Less” web site: a plethora of easy-to-use, insightful tools which could help me perform my daily job, better. A wise man once said data is free but the effort and imagination required to use it is expensive. At the end of the day, it is not about which tools you use, but rather that you use free data to make effective decisions, letting you “Do More With Less”.